Federal government approves draft program law to implement budget agreement

The federal government has approved, after a second reading following legal vetting from the Council of State a draft program law which includes several tax measures to implement the budget agreement reached on 24 November 2025. The draft has been sent to Parliament and is expected to be approved in March.

The draft law introduces a new adjustment to the VVPRbis scheme and the liquidation reserve regime following the amendment by the Program Law of 18 July 2025 (see our previous newsletter).

• Regarding the VVPRbis scheme, distributions after the waiting period will be taxed at 18% instead of 15% from the first day of the month following the month of publication of the law in the Belgian Official Gazette.
• Regarding the liquidation reserve, distributions from the liquidation reserve after the 3-year waiting period will be taxed at 9.8% instead of 6.5% for liquidation reserves set up for financial years ending on or after 31 December 2025. Together with the initial corporate tax levy of 10% when the liquidation reserve is set up, this also amounts to a total tax of 18%. Any change made to the financial year-end date from 24 November 2025 onwards and which cannot be principally justified by other motives than the avoidance of income taxes will have no effect for the purposes of determining on what date the decreased liquidation reserve was initially set up. The new rules apply to dividends paid or attributed as from the 10^th day following the publication of the law in the Belgian Official Gazette.
  
  Furthermore, the distribution of the liquidation reserve upon liquidation will no longer be exempt if the recipient within 3 years following the distribution directly or indirectly exercises the function of a business leader in a company with the same or similar activities of the distributing company unless this can be principally justified by other motives than obtaining the exemption. The dividend then becomes taxable in the year in which this fact takes place for the first time within this period of 3 years. In that case, a declaration obligation also applies (no liberating withholding tax). This anti-abuse measure will apply as from the first day of the month following the month of publication in the Belgian Official Gazette.

While the scope of the regime will again be extended to computer programs (see our previous newsletter), the lump-sum cost deduction of 25% to 50% will only be granted if the taxpayer holds an art work certificate (cfr. article 7 of the Law of 16 December 2022 and article 12, § 8 of the Royal Decree of 13 March 2023). This will apply to income paid or attributed as from 1 January 2026 or, for the purposes of withholding tax, on income paid or attributed as from the 10^th day following the publication of the law in the Belgian Official Gazette.

To limit the budgetary cost of the exemptions, a corrective factor must be applied to the exempt amount:

• between 1 January 2027 and 31 December 2027: 97%;
• between 1 January 2028 and 31 December 2028: 93.35%;
• as from 1 January 2029: 95.9%;

This corrective factor applies to all exemptions: night and shift work, research and development, support zones, etc.

The tax is increased from 0.15% to 0.3% for reference periods ending from the date of publication in the Belgian Official Gazette.

Last year, legislation was adopted increasing the bank tax rate from 0.13231% and 0.17581% to 0.15205% and 0.20204% respectively from assessment year 2026, but the draft program law includes a further increase to 0.19286% and 0.25626% respectively from assessment year 2027. In return, the taxable base will be reduced by debts to the European Investment Bank and to central counterparties.

The tax is increased from 9.25% to 9.6% for premiums due from 1 April 2026.

Following an earlier amendment by the Program Law of 18 July 2025 (see our previous newsletter), the tax will be set uniformly at 10 EUR from 1 January 2027. There will no longer be a distinction based on distance. The tax will be further increased to 10.5 EUR and 11 EUR from 1 January 2028 and 1 January 2029, respectively.